Agreement on advance payment when purchasing an apartment: sample agreement

What is it - an advance payment when buying and selling a home?

When concluding a purchase and sale agreement for such an expensive item as residential real estate, both parties are worried that the deal will not fall through. To protect their interests, the seller and buyer use different measures, one of them is making an advance payment.

Civil legislation does not provide for separate rules on advance payments, but it does contain such a term.

In advance, based on the contents of Part 3 of Art. 380 of the Civil Code of the Russian Federation, is the amount paid by the buyer to the seller towards the contract price before the bulk of the money is transferred. An advance is a partial prepayment paid before the apartment is transferred from the seller to the buyer. Prepayment is provided for in Art. 487 Civil Code of the Russian Federation.

The law provides for two types of payment: prepayment:

Advance, “net” prepayment.
Deposit, advance payment with certain conditions.

The fundamental difference between them is that the parties must stipulate additional conditions for the deposit - at least in the preliminary agreement. Unless the document specifically states that the amount transferred is a deposit, it should always be considered an advance.

Advance agreement for purchasing an apartment

The advance agreement is drawn up in writing. In order to be confident in all the nuances and the correct drafting of the agreement, you need to seek help from realtors. The latter, in turn, already have samples where the details of the agreement are spelled out. However, you should know what should be in the contract itself, as well as what should be included in it. Thus, the agreement should contain the following points:

information about the apartment;
advance payment amount, terms and methods of prepayment;
information about the parties to the agreement;
date of the purchase and sale transaction;
duration of the contract;
date of signing the contract;
possible penalties in case of violation or termination of the contract.

Just as in the case of a deposit, the seller should write a receipt at the time of receipt of funds. Its content should read:

document title and date;
information about the parties to the transaction;
deposit amount (in capital letters and numbers);
characteristic features of the apartment;
seller's signature.

Remember, it’s better to check everything several times before signing anything!

How much is the payment?

The legislation says nothing at all regarding the size of the first (advance) payment. This condition is entirely at the discretion of the parties.

In any case, the advance must be less than 100% of the cost of the apartment. Otherwise, we will have to talk about full prepayment, and not about an advance payment.

In practice, the size of the advance varies greatly depending on the price and class of housing . For an ordinary one-room apartment, the seller may ask to pay in advance about 10% of its cost, for luxury, expensive housing - usually no more than 2-3%. However, these amounts are purely indicative: neither the obligation of the advance nor its exact amount is fixed by law, and practice varies depending on the city and the current state of the housing market.

How to properly formalize an agreement between individuals?

In any form?

The law does not provide for requirements for drawing up an agreement on making an advance payment. Formally, you can even conclude it orally. But, since the advance payment acts as a guarantee when concluding a real estate purchase and sale agreement, for which written form is required (Part 1 of Article 550 of the Civil Code of the Russian Federation), it is necessary to draw up this document at least in simple written form.

Neither registration nor notarization is required for an advance agreement. However, the parties have the right to contact a notary and have the advance agreement certified.

Contents and essential conditions

The parties must agree on the following points in the advance payment agreement::

Subject of the main agreement. The parties must indicate which particular transaction is secured by the advance payment. Therefore, in the advance payment agreement you must either indicate the details of the already signed contract, or describe what kind of housing the advance payment is being made for.
The price of the main contract and the amount of the advance. The size must be indicated as an exact amount to avoid disputes.
The method by which an advance payment is made is by transferring cash against a receipt, transferring money to a bank account or seller’s card, etc.
The period within which the advance payment must be made.
Responsibility for failure to pay the advance within the period established by the parties.

At the request of the parties, the agreement can be supplemented with other conditions that the seller and buyer considered important for themselves.

The agreement (or contract) on making an advance payment when purchasing an apartment can be downloaded below:

Sample agreement 2020

The legislation does not contain specific requirements for the sample or approved forms of the advance agreement. Therefore, the parties themselves can draw up this document and adjust the text to suit their case. Usually the document is called an agreement, although it would not be a mistake to call it an advance agreement.

Expert opinion

Salomatov Sergey

Real estate expert

Details of the parties and the subject of the agreement

Indicate the place of signing, date, full name and passport details of each party.

The subject of the agreement is usually 2 statements at once:

The first is associated with the obligation to conclude a purchase and sale agreement, according to which the apartment in question will necessarily be transferred from the seller to the buyer no later than a specified date (for example, within 1 month).
The second is related to the description of the advance itself – i.e. the amount that is transferred as an advance payment from the buyer to the seller. Its size is usually set as a percentage of the cost of the apartment, but in any case you need to accurately write down the amount in numbers and words. It is also necessary to separately indicate that this money is already included in the cost of the transaction, i.e. in the future, the buyer only pays the difference.

It is important to point out that we are talking specifically about an advance, and not about a deposit . These are different concepts, although there are common features between them.

Expert opinion

Salomatov Sergey

Real estate expert

It is assumed that at the time of signing this agreement the parties have already agreed on the final cost of the apartment. This price is also recorded in the document.

Information about documents for the apartment

A separate clause specifies in detail who exactly is the owner of the property and on what basis the apartment belongs to him. Thus, the advance agreement must indicate the details of the certificate of ownership, as well as the agreement on the basis of which the object became owned by the owner (purchase and sale, donation, etc.). If the property has been inherited, there is no contract - instead, the details of the inheritance certificate are indicated. It is assumed that the buyer has reviewed all these documents before signing the agreement and is convinced of their authenticity.

Seller's obligations

The most important points are related to the obligations of the parties to the transaction. The very fact of signing an agreement implies that the seller and buyer guarantee each other certain actions or facts. For example, the owner claims that the following information is correct:

no third parties are claiming the apartment;
there are no tenants in the apartment (private or legal entities);
she is not under arrest on the basis of a court decision;
there is no mortgage encumbrance (although it may be present - this is worth mentioning separately);
the owner is fully capable and is not registered with the relevant medical institutions (psychiatric, drug treatment clinic);
the object was not subject to illegal redevelopment; if any structural changes were made, they were made in accordance with the permission of the municipal authorities;
there is no ban on registering new residents (for example, it may be if the house is declared unsafe, and therefore it is planned to demolish it).

Separately, a complete list of persons who are currently registered at this facility is prescribed. Indicate the full name, date of birth and degree of relationship with the owner, if we are talking about relatives.

A separate paragraph can indicate the procedure for conducting the transaction and other obligations of the owner:

Provide the buyer with all documents before signing the agreement, and if this is not possible, provide the documents no later than the specified period.
Do not carry out any actions with the apartment during the entire term of the advance agreement if they may violate the rights of the buyer (register other persons, enter into similar agreements and accept advance payments from strangers, carry out redevelopment, etc.).
Pay off all utility bills for which obligations arise up to the date of signing the final purchase and sale agreement.
Appear on the day of the transaction at the Rosreestr authority (or MFC), and also ensure the appearance of all owners (if, for example, we are talking about the sale of a share or a room in a communal apartment, this is a mandatory requirement).
Remove from registration (i.e., write out) all citizens who were previously registered in the apartment at the time of signing the purchase and sale agreement. You can also separately indicate that the owner must, by this time, terminate the lease agreements, if any were previously concluded.
Other obligations (for example, to assist the buyer during the renewal of contracts for the provision of telephone services, the provision of an Internet line, etc.).

Expert opinion

Kharitonov Andrey

Leading Mortgage Lending Expert

We advise you to familiarize yourself with how to correctly draw up a preliminary purchase and sale agreement - details here.

Seller's responsibility

Responsibility arises due to the fact that the owner, on the one hand, must sell the apartment to this particular buyer, and on the other hand, he takes the advance amount. Thus, the seller bears material (financial) responsibility to the home buyer.

If any of the obligations are ultimately not fulfilled and the owner refuses to proceed with the transaction, he will have to:

Refund the advance amount in full within a short time (usually 1 business day).
Pay a penalty, the amount of which is negotiated separately.
Compensate for damage incurred by the buyer (this can also be specified separately).

Buyer's obligations and responsibilities

For his part, the buyer also assumes an obligation, the essence of which is that he, too, cannot evade the transaction and must purchase an apartment within a specified period at a pre-agreed price. Otherwise, the seller has the right to withhold the advance amount in full - the money will not be returned to the buyer.

If unforeseen circumstances arise

Force majeure circumstances may also arise that neither the seller nor the buyer could objectively foresee. These are also called force majeure events. In this case, the advance agreement will be considered terminated, and the entire amount for 1 business day will be returned to the buyer.

At this point you can refer to the norms of civil law, for example:

However, it is also advisable to separately state what specific cases we are talking about (fires, natural disasters, sudden, sudden jumps in prices on the real estate market, etc.). You also need to indicate what facts could lead to the buyer losing the apartment (or limiting his rights to it). Usually we are talking about possible claims from third parties (spouse, children, etc.).

The procedure for making payments and organizing the transaction

This point is also important to include in the advance agreement. This means the following provisions:

How will the payment take place - in cash, by exchange through a safe deposit box, by bank transfer, through a bank (using a letter of credit [/anchor]), etc.
Who exactly will sign the purchase and sale agreement - the parties themselves or their representatives, who act under a notarized power of attorney.
Who pays the costs associated with completing the transaction?

Final provisions

Finally, the parties indicate from what date the agreement comes into force and until what day it will be valid. It is until this date that the obligations of each party are considered to remain with each other, after which the agreement can be extended. To do this, you need to obtain additional consent from the parties, which they confirm with their signatures.

Here the parties reflect that the document is drawn up in 2 identical copies, each of which has equal legal force. Finally, it is very important to separately register the very fact of receiving/transferring funds – in numbers and in words.

Is it possible to specify the amount in the preliminary agreement?

Until now, we have talked about payment under a separate agreement concluded by the parties. Often, to ensure a future purchase and sale, the parties enter into a preliminary agreement . Is it possible to include an advance payment in its terms? The law does not provide a clear answer on this matter.

However, since this option is not directly prohibited by law, Art. 421 of the Civil Code of the Russian Federation, which provides for freedom of contract. It directly states that the parties have the right to conclude a deal, even if it is not provided for by regulations, by including in it any conditions that do not directly contradict the law.

In this case, the actions of the parties will be as follows:

A preliminary agreement is concluded.
An advance payment is paid.
The main contract is concluded.
The buyer pays the remaining amount under the conditions specified in the housing purchase and sale agreement.

If the conditions for advance payment are included in the preliminary agreement, then there is no need to separately provide for liability for non-payment. Upon conclusion of the agreement, the buyer transfers money to the seller immediately .

Methods of depositing funds

A down payment on a home purchase can be transferred from the seller to the buyer in several ways:

By transfer of cash.
In this case, the buyer simply pays the agreed amount to the seller, and he issues a receipt for the money.
For accuracy, the receipt can be certified by the signatures of one or more witnesses present at the transfer.
Via bank transfer.
This method is most often used if the seller is an organization, but no one prohibits non-cash payments for individuals. The buyer deposits money into his bank account or card, and then makes a transfer from there to the seller in the previously agreed upon amount.
This method absolutely reliably saves the seller from the possibility of receiving counterfeit bills, but it may take longer: if the parties have accounts in different banks, the transfer may take a couple of days.
In addition, in this case, the buyer will have to pay the bank a percentage for the transfer.
Using a safe deposit box.
This option is suitable in cases where the parties transfer significant amounts as an advance payment, and the seller and buyer are concerned about the safe transfer. The buyer rents a safe deposit box in a bank depository, stipulating in the lease agreement the seller's right of access to it under certain conditions. After this, the required amount is placed in the cell, which the seller takes from there.
This transfer option is safe, but also requires rental costs. In addition, this type of banking services is not available everywhere: in a small city there may not be a bank branch with a depository. Finally, this option is more often used when transferring principal than when making an advance.

If desired, the parties may use other payment methods permitted by law.

Consequences

In the case of an advance, cancellation of the transaction will have slightly different consequences. If the buyer initiates the cancellation, he will bear the consequences in accordance with the Civil Code. In this case, the seller has the right to demand compensation for losses incurred. If the cancellation of the transaction was due to the fault of the seller, the buyer has the right to a refund of the advance payment. There are also situations when the seller delays the process of returning the advance payment. In such circumstances, penalties are provided, regulated by the loan regulations.

Thus, the seller is more profitable under the terms of an advance payment rather than a deposit, since in the event of unfavorable circumstances he will only have to return the funds received, and not pay twice as much as with a deposit.

Let's look at a sample agreement for making an advance payment when buying an apartment in more detail.

Consequences of refusing a deal

Many people are concerned about the question of whether the advance is returned or not in case of cancellation of the deal. In the event that an advance is made, but one of the parties to the contract decides to refuse the transaction, the consequences depend on the liability conditions included in the contract.

If there are no additional measures in the contract, the advance payment is returned to the buyer in full . Moreover, if the deal fell through due to the fault of the seller, then the buyer has the right to demand from him not only an advance, but also interest in the amount of the discount rate of the Central Bank of the Russian Federation (Article 395 of the Civil Code of the Russian Federation). However, to do this, the buyer must first demand the return of his funds: interest will be accrued only after the seller does not fulfill his request on time.

Here the advance is fundamentally different from the deposit. For deposit Art. 381 of the Civil Code of the Russian Federation provides the rules:

If the buyer is to blame for the failure of the transaction, the deposit remains with the seller.
If the seller refuses the contract, he returns the money in double amount.
If the contract is terminated by mutual agreement of the parties, then the seller simply returns exactly as much as he received.

Often, many buyers confuse “deposit” with the concept of “advance payment” . However, this does not mean that an advance is worse than a deposit. The conditions for the deposit are strictly stipulated in the Civil Code of the Russian Federation - and in the agreement on the advance, the parties can prescribe any measures of liability for a failed deal and delay in returning the money.

Provided by Art. 395 of the Civil Code of the Russian Federation, interest is applied only if the contract between the seller and the buyer does not provide for other conditions.

When purchasing an apartment, not only an advance or deposit can be used, but also a deposit, which you can read about in other materials.

Advance and deposit

In the field of purchase and sale of property, an advance is found in Article 380 of the Civil Code, which describes the concept of a deposit. The article states that if doubts arise about whether partially contributed funds should be considered a deposit, especially without observing a written form of the agreement, then this amount automatically becomes an advance. As a consequence, in this case, appropriate sanctions are applied if the terms of the signed agreement are not fulfilled.

It should be taken into account that there are significant differences between an advance and a deposit. They perform different functions despite being used in identical situations. The consequences of violating the terms of the advance agreement when purchasing an apartment and the deposit will be different.